Key Takeaways:
Bitcoin began the final week before the halving with an uphill struggle as its price continued to fall for the third consecutive day. Last weekend saw the world’s largest cryptocurrency by market capitalization decline 15% in value, falling from $67,000 to under $63,000 in a matter of hours.
Bullish traders continue to protect high lines for the wider market by leaning on inflows from the spot Bitcoin exchange-traded funds (ETFs), and the upcoming block reward halving event scheduled to take place around April 20th. However, the bears believe BTC prices will not rally as anticipated due to macroeconomic and industry-related factors.
Bitcoin Fall Linked to Recent Macroeconomic and Geopolitical Events
Geopolitics played a major role in the decimation of the crypto and stock markets, especially the hostilities in the Middle East between Israel and Iran. Experts are comparing the current scenario to the cross-market crash that took place in March 2020, at the onset of the COVID-19 pandemic.
Although it was the altcoins that suffered the brunt of the situation, leverage positions in Bitcoin were wiped out in an instant. 30% of open interest in BTC, equalling around $800 million where traders were expecting prices to reach ATHs before the halving, was lost.
The news of the fresh geopolitical instability in the Middle East caused the crypto market to suffer immediate loss. Similar to when the conflict between Russia and Ukraine began in February 2022, traders were quick to sell off their leveraged positions in Bitcoin and altcoins.
Altcoins suffered the most, with some losing 50% of their value in the past week, while Bitcoin in the BTC/USD trading pair experienced lows of just above $61,000.
Experts Optimistic About Bitcoin Gaining Lost Ground
However, there is a glimmer of hope on the horizon as Cointelegraph reported that Bitcoin’s market dominance over the combined crypto market cap hit a three-year high this past week. Popular market analyst Matthew Hyland suggested that in hindsight, the signs of a flash correction had already been present.
In an X post, Hyland wrote that Bitcoin was still consolidating at all-time highs while altcoins were punished during the correction as a way to rid the market of “over-leveraged and weaker hands”.
Popular trader ‘Credible Crypto’ noted ongoing shifts in the liquidity being placed and pulled from leading exchanges, namely Binance. He summarized that the market was looking healthy and spots were still “trading at a premium”.
According to data from CoinGlass, the combined liquidity across all cryptocurrency exchanges shows that as of April 15th, the largest order of bids was at $68,000 for Bitcoin.
While referring to the monthly close levels of March, experts argued that BTC still holds well above its previous cycle highs and is optimistic about a hike in price. To put things into perspective, last week’s close at $65,750 for the BTC/USD pair was the lowest since the beginning of March.
US Fiscal Spending Holds Greater Power Over the Financial and Crypto Markets
US inflation remains an important point of consideration for traders, who have repeatedly teased about the odds of interest rate cuts on the dollar coming sooner rather than later this year.
Latest estimates from the FedWatch Tool show the odds of a 0.25% rate cut to be announced during the Federal Reserve’s next meeting in July at 43%. Meanwhile, the chances of a rate cut during the September meeting stand at 45%.
Financial commentator, Tedtalksmacro, told his X followers that given the crypto market’s sensitivity to dollar interest rates and inflation, “any irrational dip on data that reprices the outlook for rates is a buy”. He highlighted that fiscal spending has the greater power over the market.
With just four days to go until Bitcoin’s imminent block subsidy halves, traders remain focused on the apex cryptocurrency’s price rather than the seminal network event. Miners are at the forefront of the upcoming changes, with their revenues in the form of new BTC mined per block set to drop by 50%, from 6.25 BTC to 3.125 BTC.
Researchers suggest that miners are upping selling pressure around the pivotal event. The latest data from Glassnode shows the BTC balance in known miner wallets has remained the same since the end of March.
Hong Kong Approves the Listing of Spot Bitcoin ETFs, China Set to Re-Enter the Market
A positive market event that happened was regulators in Hong Kong approving Bitcoin and Ether (ETH) spot ETFs for trading. Observers are excited over the news as it indicates future Chinese participation in the market, which before Beijing’s crypto ban, was the most dominant.
ETF issuers including China Asset Management, Harvest Global Investments, and Bosera Asset Management will be launching spot BTC and ETH exchange-traded funds on the Hong Kong stock exchange.
The Hong Kong Securities and Futures Commission has given these companies the approval to provide virtual asset management services to their customers.
Bitcoin spot ETFs remain one of the most successful investment vehicles in history. In the US, BTC-backed funds from investment giants BlackRock and Fidelity have seen net inflows every day since their launch in January.
Bitcoin’s Fear&Greed Index Closing in on “Extreme Greed” Ahead of Halving
The Fear & Greed Index for Bitcoin reached 72/100 last week, marking its lowest in around ten days, but this is far from a capitulatory move. At press time, the index is hitting 74/100, getting ever closer to the “extreme greed” zone.
An X survey by WhalePanda showed that a majority of traders still envisage Bitcoin to retake the $70,000 position by next weekend. Only time will tell.
At the time of writing, Bitcoin (BTC) is trading at $62,809 – down 3.7% in the last 24 hours.
